ZestMoney, Once Valued At Rs 3400 Crore, Shuts Down; All 150 Employees Fired


Rohit Kulkarni

Rohit Kulkarni

Dec 09, 2023


ZestMoney, a startup specializing in the buy now, pay later model, is ceasing operations due to unsuccessful attempts to secure a buyer. This decision follows the departure of ZestMoney’s founders in May, prompted by the breakdown of acquisition discussions with fintech giant PhonePe. The reins were handed over to a new leadership team, who, despite raising additional funding from existing investors, has opted to wind down the startup by the end of the month.

ZestMoney, Once Valued At Rs 3400 Crore, Shuts Down; All 150 Employees Fired

ZestMoney’s Innovative Journey: Empowering First-time Internet Users with Small Loans and Addressing India’s Credit Challenges

Based in Bengaluru, ZestMoney had gained attention for its capacity to underwrite small loans for first-time internet users, attracting notable investors like Goldman Sachs, PayU, Quona, Zip, Omidyar Network, and Ribbit Capital. Over its eight-year journey, the startup, once valued at $445 million, raised over $130 million and employed around 150 individuals.

Utilizing alternative data points, ZestMoney addressed the challenge posed by India’s low credit card penetration, which left a significant portion of the population without traditional credit scores. The startup aimed to enable consumers to make their first online purchases by building credit profiles through innovative means. However, the unfavorable landscape for small loans, coupled with the absence of traditional credit scores, posed challenges.

Navigating Challenges: ZestMoney’s Closure Amid Leadership Changes and Broader Trends in the Fintech Landscape

The leadership, which communicated the shutdown decision to employees on Tuesday, did not provide comments on the matter. ZestMoney’s attempt to find a new path under new leadership involved engaging with various investors and fintech giants in recent months.

This development is part of a broader trend, with emerging startups like Axio and LazyPay seeking to establish a presence in a market traditionally dominated by the financial giant Bajaj Finance. The shutdown of ZestMoney coincides with Omidyar Network facing setbacks, as another backed startup, Doubtnut, agreed to a $10 million sale after raising over $50 million and previously entertaining a $150 million acquisition deal.

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Rohit Kulkarni
Rohit Kulkarni
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